Republicans Fight for Small, Democrats for Big, Business

Jeffrey H. Anderson

December 24, 2012 9:33 AM

As the tax debate continues, Republicans have a good opportunity to contrast their own support for small businesses with the Democrats' support for big business. As Kimberley Strassel writes in Friday's Wall Street Journal, big business is backing President Obama's refusal to stop the looming tax hikes on the top 2 percent of income-earners. Those tax hikes—which are going to happen whether a deal to avoid the misnamed "fiscal cliff" is struck or not (as Obama won't agree to any deal that prevents them)—would sock it to small businesses and weaken them as competitors of big business. (As I've previously argued, the GOP would be wise to pass legislation to stop the tax hike on the other 98 percent and provide spending cuts to offset the projected revenue loss.) As Strassel writes:

"The Business Roundtable let the cat out of the bag on Dec. 11 when it circulated a letter signed by 150 of its corporate titans sanctioning year-end income-tax hikes. The letter happened to appear a few hours after the White House leaked its offer to include corporate tax reform as part of any cliff deal. The reform, in theory, would lower corporate tax rates.

"Put another way, the Roundtable saw an opportunity to make the one million small American business owners who pay individual income taxes shoulder a big rate hike (up to 39.6%, from 35%) while radically lightening the tax load for the Roundtable's own corporate behemoths (to 28% from 35%). Any corporate tax reform hinges on closing 'loopholes' to pay for a lower corporate rate. Small business owners would lose tax perks along with everyone else—meaning they would pay even more—but they would not benefit from lower corporate rates."

Strassel ads:

"Some CEOs have taken to spinning bizarre economic logic on behalf of their position. Witness FedEx CEO Fred Smith, who recently explained that it is 'mythology' that raising taxes on small business kills jobs. But it was true, he said, that lowering corporate rates for big business will help create jobs. Track that logic.

"The White House is lapping all this up, using the corporate sellout to its political advantage. President Obama has appeared mainly with the big CEOs who agree with him, the better to present them as representative of all business, and the better to highlight their back-stabbing of Republican budget negotiators. By contrast, the National Federation of Independent Business—which remains opposed to individual rate hikes on its many small business members—has been treated like a pariah. That's the thanks that they, along with the Chamber of Commerce, get for holding true to the principle of tax reform and lower taxes for all businesses.

"The White House played a similar game with Big Business leaders during the health-care debate. Back then, the president promised that in return for their support of ObamaCare he'd give them corporate tax reform. Fool me twice..."

While big business cozies up to Obama once again, Republicans have an opportunity to enhance their reputation as the party of Main Street. But it won't be enough for GOP congressmen and spokesmen to continue repeating that they are looking out for small business. For this point to resonate with the public, they will have to directly contrast their support for small business with Obama's preference for big business, the natural ally of big government.